Designing Responsible End-User Subsidies for Energy Access : A Toolkit Featuring Case Studies for the Design of Subsidies in Off-Grid Solar and Clean Cooking

Overview & Synopsis

Off-grid solar (OGS) and clean cooking solutions have played a significant role in accelerating universal energy access. An integrated approach, leveraging end-user subsidies (EUS) alongside other public financing mechanisms, is needed to overcome these challenges. End-user subsidies are an essential instrument to close the affordability gap and have been implemented at a greater scale in recent years. This report builds on the experience of ten countries having deployed or adjusted EUS programs within the last decade. This toolkit provides a framework to design responsible subsidies, building on lessons learned, considering different contexts and objectives, and balancing tradeoffs. The way a subsidy is designed will have an impact on the cost to the government, the speed of rollout, the number of people reached and its scalability, as well as the market-distortion and political risks discussed above. The toolkit provides recommendations on how to inform the subsidy design, options to set specific parameters (targeting, subsidy level, delivery, verification, exit or adjustment), as well as guidelines for communication about subsidies. It also provides recommendations on monitoring, evaluation, and adaptation mechanisms. This toolkit is primarily focused on subsidies for the purchase of off-grid solar products and clean cookstoves; it is limited in its application to fuel or electricity subsidies. The report however acknowledges the importance of emerging fee-for service or electricity-as-a-service models, and most of the recommendations in this toolkit are also suitable for these models.